By Samir Parikh (Wake Forest University School of Law)
In 2021, Arizona created the alternative business structure (ABS), which allows nonattorneys to own a firm that provides legal services and actively participate in firm management. Scholars have argued that this new paradigm will erode the attorney-client relationship. This represents a legitimate concern. Conflicting fiduciary duties can complicate key moments in case resolution. But the impact of Arizona’s shift is more seismic. The true threat does not involve nonattorneys owning a law firm but, rather, private equity firms vertically integrating the entire mass-tort machinery. The endgame is a litigation colossus that rolls up law firms, marketers, claim aggregators, administrative vendors, and medical clinics; creating an apex predator that can weaponize litigation.
The litigation colossus threatens to alter fundamental tenets of mass-tort bankruptcies by bringing new actors to the settlement table and shifting case dynamics. The colossus will be uniquely positioned to marshal claims – both meritorious and nonmeritorious – and quickly build inventory. The colossus can also purchase claims from tort victims and be better positioned to withstand the urge to settle prematurely. In fact, this actor may be able to consistently ratchet pressure until a corporate defendant is forced to capitulate, case merits notwithstanding. Johnson & Johnson has repeatedly blamed third-party litigation finance for creating a false narrative around talcum powder and, ultimately, decimating that business. A litigation colossus could easily pull similar levers but do so systematically on a much larger scale.
This Essay, forthcoming in the University of Michigan Law Review Online, offers a primarily descriptive treatment in extrapolating the future of aggregate litigation and mass-tort bankruptcies with the hope of initiating a dialogue on this convoluted issue. The engagement of academics and policymakers is paramount in understanding the new dynamics and risks that the litigation colossus will create and what – if any – legislative intervention may be necessary.
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